Why do established companies struggle to become more agile? It is basically because the executives believe there must be a trade-off between speed and flexibility on one hand and stability and scale on the other.
Startups grow quickly but once they reach a certain scale they struggle to maintain momentum. Large companies become more constrained by rules and bureaucracy to capture economies of scale but this hampers their ability to move fast.
Truly agile organisations learn to be stable and dynamic. Companies should design structures, processes with a set of core elements - the backbone. They must also create a loose arrangement that can be adapted to new opportunities.
The power of And
Most of the efforts are directed towards making the organisation more flexible and quick. Companies created a flexible ring, fencing off the agile team from the rest of the organisation. High performing companies have core features that remain constant over time while rapid innovation teams that adjust their resources quickly. In the mobile industry, the hardware and the OS have remained stable, with incremental improvements with the applications software being added, updated, modified, deleted as the requirements change and new requirements develop.
Balancing the tension
There are three core areas where balancing this flexibility and stability is critical.
Structure: Traditional hierarchies define where work gets done, how performance is measured and who is responsible for rewards. Agile organisations choose which dimension of the organizational structure would be primary for the project.
This will decide where the employees work, where the infrastructure is located. The performance measurement and rewards happen within teams cutting across the formal structure.
The traditional structure would anchor the employees along their career paths while the teams cut across the structure forming, dissolving as the market demands change. This may involve getting members across geographical boundaries based on the needs to tap the best talent available.
In the traditional structure, organisations are designed to run like clockwork, with clear boundaries for each role, and hierarchies for supervision. This rigid structure restrains the creativity, innovation that the social and technological changes could unleash.
This requires a team with a flexible approach aimed at solving the problem that the company has chosen to address. The roles, capabilities and the accountability of the team member could be the function of the unit head he belongs to whereas his work is determined by the team leader to whom he will report and the team members with whom he collaborates.
For agile teams, the stability of an organisational home is critical. It helps companies redeploy employees more easily and rapidly without fear of job losses.
Governance: Agile governance establishes both stable and dynamic elements in making decisions. There are three types of decision making.
- Type 1 - decisions where the stakes are high.
- Type 2 - frequent decisions that require cross-unit dialogue and collaboration.
- Type 3 - Decisions that can be combined into smaller ones and delegated to people with clear accountability.
It is the Type 2 decision that hampers agility. Address this problem successfully, by defining which decisions should be taken by a panel and what can be delegated to direct reports. They should dynamically rotate the members on the panel, engage in healthy discussions and real decision making.
Process: Agile companies must create a set of stable processes. These are normally unique to the companies requirements in which they can excel and the competitors would find hard to replicate. Employees must understand how the key tasks are performed, how the different stages drive the timetable for completion. Then companies can move quickly deploying the teams and resources. When this is lacking, agility suffers.
Performance management is crucial. Companies should build on certain common KPIs so that all functions have a stake in business outcomes. This should be the foundation for regular team targets, which should be reviewed periodically, preferably every quarter. This would enable companies to become more agile.
Companies must review and redesign their structures, governance and processes regularly to strike a balance between stability and flexibility. One critical requirement for sustaining change is putting in place the behavioural norms required for success. The clearer and more widely adopted these behaviours across the company, the easier it will be to modify the structure to pursue agility.
Agility: It rhymes with stability
Wouter Aghina, Aaron De Smet, and Kirsten Weerda
McK 2015/12
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